Apple Executive Denies E-Books Conspiracy

MANHATTAN (CN) – A top Apple executive denied that the company conspired with major book publishers to inflate the cost of e-books and put an end to the so-called “Amazon problem.” Eddy Cue, the senior vice president of Internet and Software Services at Apple, spearheaded the launches of the iTunes Store, App Store, iBookstore and iCloud services. On the stand Thursday, he also denied having any knowledge that major book publishers were working together as he negotiated individual deals to enter the e-book market. Apple is the last defendant standing in the government’s antitrust case against six of the world’s leading publishers and two subsidiaries. Hachette, HarperCollins, and Simon & Schuster all settled in April 2012. Penguin joined the settling bandwagon in December, and Macmillan copped to its role in the scheme two months later. Wrapping up testimony in the second week of the Apple trial, Cue insisted that “nobody at Apple had known” about the meetings. “I work very closely with my team, and that would’ve jeopardized my negotiations,” he added. Cue said the publishing executives expressed to him that “they wanted higher prices,” but he denied allegations that deals were forged to push Amazon into similar agreements and raise its prices. When asked whether publishers wanted to charge more for e-books, Cue responded, “That’s correct. They had expressed that they wanted higher prices from us.” The government has argued that publishers were miffed at Amazon for making the $9.99 price on e-books “an entrenched consumer expectation.” To raise prices, they allegedly conspired with Apple on ending competition. Prosecutors presented the court with emails between Cue and the late Steve Jobs, illustrating that Jobs worked closely with Cue on the new venture. In one message, Cue tells Jobs that publishers were “willing to do an agency model, go agency model for new releases with everyone else, [and] agree that digital books should be cheaper than physical but need a higher tier.” The government also presented was an email that a disgruntled college student sent to Jobs in February 2010, complaining about the higher prices. “You have so much. Wouldn’t it be OK for us little guys to have something?” The student asked before closing his e-mail with, “Peace.” Jobs, who died in 2011, answered: “It’s the publishers who are raising prices, not Apple.” The student responded with another email, ending with, “Greed does not beget most, even those at the top.” Jobs again replied: “How do we stop publishers from setting prices and terms?” According to the price-fixing lawsuit, “the publisher defendants teamed up with Apple, which shared the same goal of restraining retail price competition in the sale of e-books.” The government said the alleged conspiracy cost consumers “tens of millions of dollars more for e-books than they otherwise would have paid.” Cue is expected to resume testifying Monday, which could be the last week of the trial.